Hi friends, we see that the Forex market, which is open 24/5 around the world, is gaining more and more popularity. In addition to the foreign exchange market, technical analysis is becoming indispensable, especially in today's world of cryptocurrencies, indices, commodities and stocks. The Alphabet of technical analysis is, of course, Japanese Candlesticks. Candlesticks tell us the story behind price movements. Accordingly, reading the candlestick chart correctly allows us to make profitable trades and succeed in the market. We will talk about one of the various candlestick patterns, the Abandoned Baby candlestick pattern, in today's article.
What is the Abandoned Baby Pattern
The Abandoned Baby pattern is a three-candle reversal pattern that marks a complete change in price direction. A large candle starts the formation and follows the current trend. A small candle then appears after a price gap. This middle candle sits alone because the third candle gaps in the opposite direction. Price action creates a total disconnect between the middle candle and its neighbors. This isolation shows that the previous move reached a hard stop. Sellers or buyers lost their ability to push the price further. A new trend starts right after the second gap.
Few candlestick formations offer such a sharp visual break. Financial charts rarely show this perfect separation. Its rarity makes it a powerful tool for technical analysis. Most experts view it as a total shift in power. You can find this pattern at the very peaks or bottoms of price moves. The pattern works on daily charts or intraday timeframes. It remains a high-priority signal for many technical analysts.
The Abandoned Baby candlestick pattern has two main types. One version appears after a decline and points to a shift toward higher prices. This type is known as the Bullish Abandoned Baby. The other version forms after a strong rise and warns that buying pressure is fading. This structure is called the Bearish Abandoned Baby. Even though both patterns share the same three-candle layout, the market context and the direction that follows make them very different from each other.
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| Abandoned Baby Candlestick Pattern |
Why Call it the Abandoned Baby
The name "Abandoned Baby" describes the visual appearance of the pattern perfectly. Market participants see a small candle left entirely alone. This middle candle has no connection to the candles on either side. It floats in isolation, separated by price gaps. The first large candle represents the established trend. Then, the price makes a sudden jump, leaving a void. The small, isolated candle forms within this void. This candle struggles to find direction on its own. It is "abandoned" by the previous market participants. They moved on quickly.
Another price jump then occurs, leaving this small candle truly alone. The new trend starts, and the market leaves the middle candle behind. No wick from the central candle touches either of its neighbors. This complete separation provides the story behind the name. It highlights a unique market event where a single day's price action stands by itself. This lone candle visually signals a market left in limbo before a complete shift.
Key Features of the Abandoned Baby
The Abandoned Baby candlestick pattern stands out as a unique signal in technical analysis. These specific features define its structure and behavior in the market.
- Topic: Abandoned Baby.
- Pattern Type: Dual (This means it appears in both bullish and bearish forms).
- Trend Direction: Reversal (It signals that the current trend has ended and a new one is beginning).
- Strict Gaps: The pattern must have two distinct price gaps on either side of the middle candle.
- Total Isolation: No part of the middle candle, including its shadows, can overlap with the other candles.
- Middle Candle Size: The center candle must be a Doji or have an extremely small body.
- Reliability: This is considered one of the most accurate reversal signals due to its rare and strict requirements.
Structure of the Pattern
The Abandoned Baby follows a very precise layout. You must see three distinct candles to confirm its presence. Each candle carries a unique message about the market state. This structure shows a fast shift from one side to the other.
A valid setup requires perfect separation. Most other patterns allow some overlap between candle wicks. This one does not. The lack of contact between the middle candle and the others makes it stand out on a chart. You should check every part of the structure before you decide to act. Small details determine the strength of the signal. The three parts work together to tell a story of a trend that hit a wall.
The First Candle
The process starts with a strong move in the direction of the existing trend. This candle features a long and solid body. It shows that the current market participants still hold their ground. Price moves with high speed during this phase. Most observers see this as a sign that the trend will continue.
The Second Candle (The Doji)
A sudden jump in price creates a gap after the first candle. The second candle then forms with a very small body. It often appears as a Doji where the open and close prices are nearly identical. This shows that the market reached a state of total equilibrium. Buyers and sellers now stand at a draw. The middle candle stays isolated from its predecessor.
The Third Candle
A second price jump occurs in the opposite direction of the first trend. This third candle has a large body that moves against the original move. It closes well within the range of the first candle. This sharp shift proves that the old trend failed. New participants now lead the price action toward a different path.
The Gap Factor
White space defines this unique pattern. Gaps must exist on both sides of the middle candle. This means the shadows or wicks of the second candle do not touch the first or third candles. This lack of overlap makes the signal very strong. Many other formations look similar but lack these clear voids. The gaps prove a total break in the market flow.
Bullish Abandoned Baby Candlestick Pattern
The Bullish Abandoned Baby appears at the end of a long move downward. This version signals that the downward slide has reached its final point. Sellers lose their grip on the market after a long period of decline. The first part of this setup is a large red or black candle. This shows that the market remains in a deep sell-off. Then, a gap down occurs at the start of the next period. A small candle forms below the previous close. This middle candle shows that the selling force has died out. Buyers and sellers reach a temporary truce at these lower price levels.
A sharp gap up then follows this period of rest. The third candle opens higher and moves upward with force. This candle features a large green or white body. It proves that buyers have taken the lead. The entire structure looks like a U-turn on the price chart. This specific shift often leads to a sustained move toward higher prices.
Trading the Bullish Abandoned Baby
A Bullish Abandoned Baby candlestick pattern serves as one of the best ways to enter a long position. You should wait for the third candle to close before you take action. The close of this third candle confirms that the new upward move has strength. Many traders place their buy orders just above the high of the third candle.
Risk management remains vital when you trade this reversal. You should place a stop loss order below the lowest point of the middle candle. This protects your capital if the market fails to move higher. The gap below the small candle acts as a floor for the price.
Take a look at the Tesla daily chart for a real example of this event. The price fell steadily during a long downward trend. Then, a perfect Bullish Abandoned Baby formed at the very bottom. A large red candle appeared first. A small candle then gapped down and sat alone. Finally, a large green candle gapped up and started a new bullish trend. This Tesla example shows how the market can shift from a sell-off to a rally in just three days.
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| Bullish Abandoned Baby on Tesla Daily Chart |
The Abandoned Baby remains a top choice for technical analysis due to its high reliability. This three-candle structure provides a clear exit from an old trend. Its strict requirements make it rare but very effective. You should always watch for the two price gaps to confirm the shift. Use this pattern to find the exact turning points in the market. Consistent use of these rules will improve your ability to spot major price reversals.
Bearish Abandoned Baby Candlestick Pattern
The Bearish Abandoned Baby candlestick pattern shows up near the top of a powerful upward move. This pattern signals that the rally is losing energy. After a long rise, buyers can no longer force prices higher, and momentum starts to fade. The formation begins with a large green or white candle. This candle reflects strong buying pressure and confidence in the market. The next session opens with a gap higher, creating a small candle above the previous close. This middle candle sends an important message. The upward push has stalled, and neither side is in control. At these elevated prices, hesitation takes over.
After this short pause, price gaps sharply lower. The third candle opens below the small candle and drops quickly. Its body is large and red or black, showing that sellers have taken control. On the chart, the pattern resembles a sudden drop off a cliff. This type of transition often marks the start of a deeper move toward lower levels.
Trading the Bearish Abandoned Baby
The Bearish Abandoned Baby is widely used as a short entry signal. Waiting for the third candle to fully close helps confirm that sellers truly dominate the market. Many traders choose to place sell orders just below the low of this final candle. Protecting capital is essential when trading this setup. A stop loss is usually placed above the high of the middle candle. This level acts as a barrier if price unexpectedly turns back up. The empty space created by the gap above the small candle often limits upward movement.
The Apple Inc daily chart offers a strong real-world example. Price climbed steadily during a long bullish phase. At the very top, a textbook Bearish Abandoned Baby appeared. A strong green candle came first, followed by a small candle that opened higher and stood alone. The sequence ended with a large red candle that opened lower and kicked off a bearish phase. This example highlights how market sentiment can flip from optimism to selling pressure in only three sessions.
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| Bearish Abandoned Baby on Apple Inc stock chart |
This example reflects a Bearish Abandoned Baby trading strategy built around confirmation and structure. The pattern shows how a brief pause at elevated levels is followed by strong selling pressure, offering traders a defined entry area, a logical risk level, and a structured approach to managing downside moves.
Abandoned Baby vs. Morning/Evening Star
Many traders mistake these patterns for each other because they look very similar. Both Abandoned Baby and Morning or Evening Star patterns are well-known three-candle reversal structures. At first glance, they may look similar, yet their behavior on the chart and the strength of the signal they provide are quite different. The main distinction comes from how gaps appear between the candles and how decisively sentiment changes during the formation. Also, the Abandoned Baby is much rarer and carries more weight. The key difference lies in the "white space" on the chart.
Bullish Abandoned Baby vs. Morning Star
The Bullish Abandoned Baby forms after a decline and relies heavily on price gaps. A strong red candle is followed by a gap down, leaving a small candle isolated below the prior close. This separation shows that selling pressure has completely stalled. The final candle gaps higher and closes strongly upward, confirming that buyers have taken control.
The Morning Star also signals a bullish reversal, but it does not require gaps. The middle candle usually overlaps with the surrounding candles and reflects hesitation rather than isolation. Because of this overlap, the shift from sellers to buyers often feels more gradual compared to the Bullish Abandoned Baby. The abandoned structure delivers a sharper emotional break, while the Morning Star reflects a slower transition.
Bearish Abandoned Baby vs. Evening Star
The Bearish Abandoned Baby appears near the top of an advance and depends on visible gaps to tell its story. A strong green candle is followed by a gap higher, where a small candle forms on its own. This isolation suggests that buyers are no longer confident at elevated prices. The pattern completes when price gaps lower and a strong bearish candle takes over.
The Evening Star also warns of a downside turn, yet it usually develops without gaps. The middle candle often overlaps with both sides, showing hesitation rather than a complete pause. Compared to the Bearish Abandoned Baby, the Evening Star tends to signal a softer change in control. The abandoned version stands out because the market leaves the middle candle behind, highlighting a more sudden shift in sentiment.
Abandoned Baby Candlestick Patterns – Frequently Asked Questions
Welcome to the Abandoned Baby FAQ section! Here you'll find answers to the questions traders most often have about these patterns. This will help you understand the basics and get ready to explore how they work in real trading situations.